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A: It is just like any other negotiable instrument, only that, the person indorsing
doesnt warrant the solvency of all prior parties.
Take not, only the solvency isnt warranted, all other characteristics of an indorser
will apply.
Sec. 65. Warranty where negotiation by delivery and so forth. Every
person negotiating an instrument by delivery or by a qualified indorsement
(a) That the instrument is genuine and in all respects what it purports to be;
(b) That he has a good title to it;
(c) That all prior parties had capacity to contract;
(d) That he has no knowledge of any fact which would impair the validity of the
instrument or render it valueless.
But when the negotiation is by delivery only, the warranty extends in favor of no
holder other than the immediate transferee.
The provisions of subdivision (c) of this section do not apply to a person negotiating
public or corporation securities other than bills and notes.
If you noticed , there is no guarantee that he will pay on the instrument.
Differentiate that on sec 66- general indorser, the last paragraph.
Sec. 66. Liability of general indorser. - Every indorser who indorses without
(a) The matters and things mentioned in subdivisions (a), (b), and (c) of the next
preceding section; and
(b) That the instrument is, at the time of his indorsement, valid and subsisting;
And, in addition, he engages that, on due presentment, it shall be accepted or paid,
or both, as the case may be, according to its tenor, and that if it be dishonored and
the necessary proceedings on dishonor be duly taken, he will pay the amount
thereof to the holder, or to any subsequent indorser who may be compelled to pay
And in addition------There really is a difference between qualified and general indorsers. When it says
without recourse that means you cannot go after him.
You cannot go after him for purposes of payment ONLY. If it is for any
other reason, other than insolvency, the qualified indorser can still held

For example. There was forgery, the person primarily liable, did not pay the
instrument, and here is a qualified indorser after the forgery. You cannot raise the
defense of forgery because it is different from insolvency.
What do you mean by qualified indorsement?
Sec. 38. Qualified indorsement. - A qualified indorsement constitutes the
indorser a mere assignor of the title to the instrument. It may be made by adding to
the indorser's signature the words "without recourse" or any words of similar
import. Such an indorsement does not impair the negotiable character of the
Sec. 39. Conditional indorsement. - Where an indorsement is conditional, the
party required to pay the instrument may disregard the condition and make
payment to the indorsee or his transferee whether the condition has been fulfilled
or not. But any person to whom an instrument so indorsed is negotiated will hold
the same, or the proceeds thereof, subject to the rights of the person indorsing


F collects on the instrument against X. He can collect from the person primarily
Q: If the condition is not yet fulfilled, can X be fulfilled to pay on the instrument?
A: Only, when the instrument is already due.
Q: If X made a payment to X, does that mean that F will have to hold on with that
instrument in trust of C until the condition is fulfilled?
A: That provision only applies to the conditional indorser, who, in his
option, may disregard the condition that he made when makes the
payment but the person primarily liable can still be compelled only when it
is overdue.
Q: For example, Cs condition is already fulfilled, the instrument is not yet due, can F
go to X?
A: No, because the obligation is not yet due, you can just go to C and ask payment
that the condition has already been fulfilled, then C can go after X when the
instrument is already due.
Q: Why can C be compelled to pay on the instrument?

A: Because he is the one who made the condition on the instrument, so he can be
held liable.
Student: Can C be held only secondarily liable and raise it as a defense?
A: Yes, C can always raise the defense that he is only secondarily liable and present
the instrument to the person primarily liable because after all this is a negotiable
instrument and he is the one who promises to pay the instrument.

Sec. 41. Indorsement where payable to two or more persons. - Where an instrument
is payable to the order of two or more payees or indorsees who are not partners, all
must indorse unless the one indorsing has authority to indorse for the others.
Pay to B or C or several.
Pay to B and C
GR: It has to be indorsed by B and C.
1. When they are partners,
2. When either of them is authorized by the other.
Sec. 42. Effect of instrument drawn or indorsed to a person as cashier. Where an instrument is drawn or indorsed to a person as "cashier" or other fiscal
officer of a bank or corporation, it is deemed prima facie to be payable to the bank
or corporation of which he is such officer, and may be negotiated by either the
indorsement of the bank or corporation or the indorsement of the officer.
Q;What is the effect if the instrument is indorsed in favour of the cashier?
A: It is payable to the corporation of authorized officer.
Pay to cashier, it is actually intended to the cashier of a corporation or the
particular establishment, you do not automatically say that it is intended
for the cashier personally, but this is just a presumption, it is rebuttable.
It is not necessary that it be addressed to the cashier or the president of the
corporation. It may also be addressed to the authorized persons of the corporation.
For in the first place, it is not in favour of the person of the cashier or the president
that the instrument is drawn.

Sec. 43. Indorsement where name is misspelled, and so forth. - Where the
name of a payee or indorsee is wrongly designated or misspelled, he may indorse
the instrument as therein described adding, if he thinks fit, his proper signature.
Q: What if it the name of the payee or indorsee is misspelled?
A: The person can disregard the misspelled name or correct the misspelled name.
under obligation to indorse in a representative capacity, he may indorse in such
terms as to negative personal liability.
You negative a personal liability by disclosing the name of your principal or by
indicating that you are just an agent.

Sec. 45. Time of indorsement; presumption. - Except where an indorsement

bears date after the maturity of the instrument, every negotiation is deemed prima
facie to have been effected before the instrument was overdue.
The presumption on the type of indorsement is that you are only a holder in due

Sec. 46. Place of indorsement; presumption. - Except where the contrary
appears, every indorsement is presumed prima facie to have been made at the
place where the instrument is dated.
It is important because negotiable instruments are governed by the law of the
country where the instrument is drawn.
Sec. 47. Continuation of negotiable character. - An instrument negotiable in
its origin continues to be negotiable until it has been restrictively indorsed or
discharged by payment or otherwise.
Until when is the instrument negotiable?
GR: An instrument is negotiable in its origin until paid or restrictively indorsed.
Payment is one form of extinguishing an indorsement.
SEC. 48. STRIKING OUT INDORSEMENT. - The holder may at any time strike out any
indorsement which is not necessary to his title. The indorser whose indorsement is
struck out, and all indorsers subsequent to him, are thereby relieved from liability
on the instrument.
Q: What is the rule in striking out the instrument?
I promise to pay A or bearer P100

Sgd X
At the back
Sgd. A
Pay to C
Sgd B

D can directly
trace its title
from X.

Pay to D

Sgd C
D can strike out the signature of A.
In all instances when you are dealing with a bearer instruments, all
indorsements made therein can be stricken out because it is never
necessary to the title of the person who acquires the instrument.
The bearer instrument can be negotiated by mere delivery.
It applies only to the bearer instrument, one originally drafted as a bearer
Q: What if the instrument is originally an order instrument?
A:The holder cannot strike out their signatures because they are necessary for them
to acquire title.
Pay to B
Sgd. A
Pay to C
Sgd B
Pay to D
Sgd C

As the holder of the instrument, D cannot strike out any of the signatures because
they are necessary to acquire title.
If we strike out any of the indorsement, D has not acquired the instrument. How did
C got hold of the instrument?
Therefore, you can never strike out any f the indorsements in a special indorsement,
because it did not change the nature of the instrument from order instrument to
bearer instrument.
How then, will we be able to strike out indorsements in an order instruemt?
When at first it was an order instrument then it was indorsed in blank, so, we can
strike the signature of the special indorser because the instrument now becomes a
bearer instrument.

Pay to B
Sgd. A
Pay to C
Sgd B
( blank)
Sgd C
Pay to E
Sgd D
Pay to F
Sgd E
After an
indorsement in
Find where there is an indorsement in blank.
After all , subsequent indorsements can be stricken
out. subsequent
parties can be






of an instrument payable to his order transfers it for value without indorsing it, the
transfer vests in the transferee such title as the transferor had therein, and the
transferee acquires in addition, the right to have the indorsement of the transferor.
But for the purpose of determining whether the transferee is a holder in due course,
the negotiation takes effect as of the time when the indorsement is actually made.
Striking out will also apply to prior parties, not only in special indorsements in order







Take note: The first indorsement of C is not necessary for J to acquire title of the
C got its title from B.